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SaaS Market: Changing Rules of Conduct in the Enterprise Software Industry

Software as a Service (SaaS) Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2015 - 2022
Published 27 October 2015
The Software as a Service (SaaS) market has observed a significant number of lows and highs since it became a prominent market in the late 1990s. In the last years of Internet boom, the world of software witnessed the entry of application service providers (ASPs) which sought to revolutionize the enterprise software market. Rather than directly selling software packages to the end-user with lengthy implementation methods and an up-front licensing fee, these companies delivered complex software packages through a hosted model with a pay-as-you-go delivery service. These businesses formed the outline of the SaaS industry. Till date, these businesses have continued to change the way the enterprise software industry has traditionally operated.
Within some years, most of these ASPs exited the SaaS market, changed their business model, repositioned their services, or withdrew most operations after failing to gain momentum. However, as the market matured over the years, a select group of these early SaaS market entrants quietly played their role in increasing acceptance of the service-based software delivery model. Steadily, the SaaS market achieved an important position in the software industry and is now playing its role in changing value propositions, partnerships, relationships, and assumptions between clients, end-users, software vendors and third party software service providers.
The global SaaS market is out of its early developmental phase and is expected to undergo rapid growth in the future years, playing an important role in reinventing the software industry. Today, the good performance of major SaaS companies makes the impact of the SaaS market on the overall enterprise software market apparent. In 2012, the net worth of the global SaaS market was approximately US$15 billion. The market is currently progressing at an estimated pace of 25% CAGR. Analysts cite that the boom in platform-as-a-service, customer relationships and enterprise resource planning models, and increasing interest in cloud computing are driving the market.

Global SaaS Market: A Brief Overview

The SaaS market is increasingly becoming an important and much larger part of the global enterprise software market which is currently worth more than US$260 billion. Analysts state that the pace at which the global SaaS market is improving its acceptance in various industries, it can acquire at least a 15% share of revenues of the overall enterprise software industry by the year 2015. In 2010, approximately 10% revenues earned by the global enterprise software industry came from the SaaS market. 
Currently, Customer Relationships Model (CRM) and Content Communication and Collaboration are the largest product segments, with more than 55% collective share of market revenues. Demand for product segments Digital Content Creation and Office Suites is expected to rise at the fastest pace in the future years.
The intense competition in the SaaS market is exerting downward pricing pressures on key SaaS vendors such as Microsoft which recently reduced the prices of Azure by nearly 60%, a database storage platform based on cloud-computing, in response to Amazon’s price cuts of nearly 12% on its S3 storage system.

SaaS Market: Popular Trends 

The one major factor that has significantly driven the SaaS market is its approach of addressing specific business needs. This factor will keep driving the global SaaS market in the future years as well. Developments among the proprietary SaaS providers and the intense competition in the SaaS marketplace are the other major factors fueling momentum and innovations in this market. Emerging SaaS businesses are offering applications architected purely on web that can be deployed over the internet as services. Delivery of more on-point solutions, which are narrow in terms that they address very specific business processes, is also a very popular trend in the global SaaS market. Many key Independent Software Providers are treading on the path of scaledback versions of their popular/current products.
Although SaaS models lack the wideness of functionality offered by traditional software packages, SaaS companies are contending effectively in the market by offering specialized services capable of easy integration and focused nature. Given the choice between a costly enterprise package that would take months to integrate versus an on-demand service that directly addresses a relevant business need and can be integrated within an IT infrastructure in some days or weeks, the value proposition of SaaS will always stand out to be more compelling.
Browse Full Global Software as a Service (SaaS) market Report With Complete TOC @

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